Identifier

Author

Degree

Doctor of Philosophy (PhD)

Department

Agricultural Economics

Document Type

Dissertation

Abstract

The ever increasing demand for the shrimp products in the 1980s and 1990s caused the volume of shrimp imports to increase. The import of shrimp has had an upward trend, from 847 million pounds in 1997 to 1,636 million pounds in 2010.The imports price has declined since 1997. Along with the decrease in imports price, the U.S. domestic shrimp price has also declined. However, the annual production of shrimp from the Gulf of Mexico has, in the long-run, remained relatively stable. These facts indicate that there is not the same quantity-price relation between the U.S. domestic shrimp market and shrimp imports market. Therefore, an ordinary demand or an inverse demand can only demonstrate one aspect of demand behavior either the quantities consumed are a function of prices or the prices are a function of quantities demanded, and are not able to respond in a more complicated system of demand. The basic objective of this dissertation is to determine a closer approximation of the effects of events in the real U.S. shrimp demand market. To accomplish this objective, a mixed demand system was adopted. A mixed set of demand functions contains both coefficients of a regular demand system and of an inverse demand system (Barton, 1989). This study adopts the Brown and Lee parameterization (2006), known as the mixed Rotterdam demand system. The shrimp products were divided into two subgroups: 1) shrimp imports (group a); and 2) Gulf of Mexico shrimp landings (group b). Countries considered in the analysis include China, Ecuador, India, Indonesia, Mexico, Thailand, Vietnam, and a final category includes all other exporting countries ans named as “Other Countries.” Demand for Gulf shrimp is specified by size of shrimp with three sizes: Large, Medium, and Small. The U.S. imports from these countries were modeled in a quantity dependent framework, while demands for domestic shrimp products were modeled in a price dependent framework. The summary statistics and estimated results for the model parameters indicate that Thailand has the largest share and largest marginal share among all exporting countries and Gulf shrimp landings. As theoretically expected, all own-price elastisities of regular demand are negative, implying an inverse relation between the quantity of imports from a selected country and its price of imports. Among all countries, China, India, Mexico, and Vietnam have the largest and almost the same own-price elasticities (-0.40). Thailand’s own-price elasticity is smaller than these countries, although it has the largest share in U.S. total expenditure on shrimp products. This means that there are fewer substitutes for Thailand’s shrimp than these countries’ shrimp in the U.S. shrimp market. Cross-price elastisities of regular demand were positive, indicating that the price of a selected country’s shrimp has a direct effect on the quantity of other countries’ shrimp exports. The positive cross-price elastisities also indicate that the U.S. shrimp imports from different countries are substitutes for each other, as expected. Thailand’s export prices have the largest cross-price elastisities. This means that other countries’ quantities of exports are more sensitive to a change in Thailand’s export prices than the other countries’ prices and their own prices. The price elasticity/flexibility of inverse demand illustrates that no country’s export prices have a substantial effect on any size of Gulf landings. The most effect is associated with about 0.02% on the price of small size Gulf landings for a 1% change in the price of Thailand’s exports to the United States. Vietnam, India, Mexico, China, and Thailand’s income elasticities are greater than one. Therefore, one can conclude that a change in U.S. expenditure on shrimp products not only increases the consumption of these countries’ shrimp products but that the proportion (share) of these products also goes up in U.S. total expenditure on shrimp. Income elasticities for inverse demand represent the Gulf dockside price sensitivities relative to a change in U.S. expenditure on shrimp. Results illustrate that if U.S. expenditure on shrimp products increases 100%, the Gulf large, medium, and small size shrimp prices will increase 12%, 15%, and 19%, respectively. All of these elasticity estimates are statistically significant at 1% and 5% levels.